Market Uncertainty and Earnings Guidance

Download or read book Market Uncertainty and Earnings Guidance written by Anna Agapova and published by . This book was released on 2018 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: We test a theory about ambiguity surrounding the distribution of fundamental values to determine how market uncertainty affects earnings guidance perception and behavior. We find a more pronounced negative share price response to negative earnings guidance and a lower likelihood that management issues negative guidance under conditions of greater market uncertainty. Yet, we also find that the share price response to positive guidance is not related to the level of market uncertainty, while the likelihood of issuing positive guidance decreases with market uncertainty. The asymmetric effects of market uncertainty on earnings guidance perception and behavior support the ambiguity based pricing theories.